Wednesday, January 12, 2011

Goldman Sachs: S & P 500 Will be up 18% in 2011 - Should You Trust Them?

Can you trust Goldman Sachs? The answer has to be no. But can they forecast? Well, David Kostin is out with his latest forecast and says the S & P 500 will rally 18% in 2011. It very well may, or it may not - but how has Goldman done in the recent past and did they predict the stock market crash (I'm not saying I did, I don't make short term predictions)? Well, below is from wikipedia, it is a short synopsis of their old Chief Prognosticator Abby Joseph Cohen:

A Little Goldman History - Abby Joseph Cohen

She is famous for predicting the bull market of the 1990s early in the decade. However, she failed to predict the dramatic stock market decline of the early 2000s and developed a reputation as a so-called "perma-bull" and was ridiculed for her continuous bullish predictions after March 2000 as market indices fell. Her reputation was further damaged when she failed to foresee the great crash of 2008.

On a CNBC appearance in March 2008, she predicted S&P 500 at 1550 by end 2008.

In an August 10, 2007 appearance on CNBC Abby Joseph Cohen predicted the S&P 500 would rally to 1,600 by December.

In December 2007 Abby Joseph Cohen predicted the S&P 500 index would reach 1,675 in 2008. The S&P 500 traded as low as 741.02 by November 2008.

On March 8, 2008 Goldman Sachs announced that Abby Joseph Cohen was being replaced by David Kostin as the bank's chief forecaster.

I wouldn't put much "stock" in Goldman forecasts (unless of course they are building a financial product they want to short).

Scott Dauenhauer CFP, MSFP